Step 1: Understanding the Concept
A circle in 3D is the intersection of a sphere and a plane.
Step 2: Evaluation
Sphere: $x^2+y^2+z^2+2x-2y-4z-19=0$ with center $C(-1, 1, 2)$ and radius $R = \sqrt{1^2+(-1)^2+(-2)^2-(-19)} = 5$.
Step 3: Final Calculation
Perpendicular distance $P$ from $C(-1, 1, 2)$ to plane $x-2y+2z+8=0$ is $P = \frac{|-1-2(1)+2(2)+8|}{\sqrt{1^2+(-2)^2+2^2}} = \frac{9}{3} = 3$.
Step 4: Conclusion
Radius of circle $= \sqrt{R^2 - P^2} = \sqrt{5^2 - 3^2} = \sqrt{16} = 4$.
Hence, the Answer is: (b)